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Two analyst, one expert and top management from six sector firms examine the leisure products & theme parks sector in this special 38-page Leisure Products & Theme Parks issue from The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info523.htm.

TWST: Tim, how well have the stocks of the recreational products companies and leisure activity companies that you follow rewarded investors over the past 12 months?

Mr. Conder: They are getting back to — and in some cases slightly exceeding — the levels they were at pre-September 11. But especially since September 11, the stocks have performed exceptionally well (in some instances, up over 100%). We continue to believe that this is just the start of a substantial outperformance for 2002 as well as 2003.

TWST: We have been told that the recession is over. Are you factoring a strong recovery or a gradual recovery into the outlook for 2002-2003?

Mr. Conder: We’re factoring in a gradual recovery for 2002. We have said that since the fall, when we upgraded several companies. We continue to anticipate a gradual improving environment through 2002 and then accelerating into 2003. Overall, with that economic backdrop, we think that the stocks in this sector will outperform very nicely in 2002 and also going into 2003.

TWST: How would you differentiate, from an investment standpoint, between Carnival and Royal Caribbean at this point?

Mr. Conder: Well, Carnival (NYSE:CCL) is in everyone’s view the leader in the industry as it relates to size, profitability and having the best balance sheet. They have a highly respected management team as well. Within the industry, they have the highest return on invested capital. If someone is going for leadership in the industry, then that is obviously the cruise stock to favor.

TWST: What’s driving the improvement in the cruise industry?

Mr. Conder: There are a couple of factors. Out of September 11, you saw the major companies push back and delay some of the ship deliveries that were in process anywhere from three to six months. That helped smooth out some of the capacity additions that were coming onstream. Additionally, there have been some bankruptcies over the last year to 18 months that have helped that situation. The industry had to stimulate demand and get things going post-September 11, which they did.

TWST: When you say stimulate demand, did the companies do that by offering deals and promotions?

Mr. Conder: They did it by offering very deeply discounted prices, in some instances 20%-35% below where they were just prior to September 11. That has definitely stimulated demand. We’ve subsequently seen a very sharp recovery in the industry pricing environment. Currently it is down in the neighborhood of 0%-7% on a year-over-year basis. We anticipate that pricing will continue to recover on a gradual basis throughout 2002 and going out into 2003. If you factor in the capacity coming onstream for the industry, you can make a case for a very nice continued rebound in earnings.

TWST: Has the profile of the cruise customer changed over the last few years?

Mr. Conder: Overall, I would say that it hasn’t changed materially. But you do see the cruise companies moving successfully toward the shorter haul cruise markets — i.e., those markets where customers can take a three-, four- or five-day cruise versus the historical week-long cruise. You are seeing that appeal to people who want to try cruising; instead of having to spend a whole week, they can just try spending a long weekend. Also, the industry is getting repeat cruisers and is penetrating new customer markets. When you look at it, it’s still a very underpenetrated industry in the US. And when you factor in Europe, which is about 10 years behind the industry growth curve, we see very positive long-term fundamentals for the industry, especially given the consolidation that has occurred over the last several years.

This special issue includes:

1) Leisure Activity & Recreational Products - In an in-depth (2,900 words) Analyst Interview, Timothy A. Conder, Vice President at.G. Edwards & Sons, examines the outlook for the sector including and shares specific stock recommendations.

2) Leisure Activity & Recreational Products - In an in-depth (3,700 words) Analyst Interview, Dean Gianoukos, Analyst that follows the leisure industry at J.P.Morgan Chase, examines the outlook for the sector including and shares specific stock recommendations.

3) Outlook for Them Parks - In an in-depth (4,500 words) Expert Interview, Dennis L. Speigel, President of International Theme Park Services, Inc., examines the outlook for the sector including and shares specific stock recommendations.

4) CEO interviews (average 2,500 words). Top management of six sector firms examine the outlook for their firm and the sector.